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News/Business. Becky Quick, Joe Kernen, Andrew Ross Sorkin. Business news and talk as the trading day unfolds on Wall Street. New. (CC)

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03:00:00

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San Francisco, CA, USA

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Virtual Ch. 58 (CNBC)

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mpeg2video

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ac3

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528

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480

TOPIC FREQUENCY

Us 28, Washington 21, Paul Volcker 15, Volcker 14, Obama 11, Joe 10, Becky 10, Harry Reid 9, Nevada 9, Lloyd Blankfein 8, America 7, Sandy 7, Citi 7, Nespresso 6, Greg Mankiw 5, Orrin Hatch 5, U.s. 5, Europe 4, Goldman Sachs 4, Lloyd 4,
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  CNBC    Squawk Box    News/Business. Becky Quick, Joe Kernen, Andrew Ross Sorkin.  
   Business news and talk as the trading day unfolds on Wall...  

    November 29, 2012
    6:00 - 9:00am EST  

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numbers. >> someone in the tri-state area won a million dollars. >> i thought you were a shoo-in. it's thursday, november 29th, 2012, "squawk box" begins right now. >> you are so not fun. good morning, everybody. welcome to "squawk box." i'm becky quick. andrew ross sorkin and i are here because, yes, we did not win last night. we're here with joe kernen who would have been here by himself with one producer -- you and one producer who weren't in the pool and it would have been you and dave evans. >> someone mentioned it and she had an opportunity and she was right there and she bought one and i said i want no part of it. >> i bet she and the kids had
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fun last night and you were -- >> no, i want my $2 back. but it's weird to just buy one to say what would i do if it happened. just think about what you'd do if it happened. >> i'd actually be here anyway. >> what i told the kids, when mommy married me, she already won the lottery. that's what i told the kids. >> a ba who won the lottery in your family? >> my wife. but i feel like i won the lot theory every day. >> i mean that but i'm talking about in terms of big income, big -- >> so bad. >> what? >> i won the lot theory with her, trust me. >> well, you did, finding anyone. i would -- i didn't know that someone had won. so you didn't buy your tickets in missouri or arizona ?
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>> no. >> yesterday i really had a good feeling. >> you were looking forward to having the set by yourself. >> it's probably going to be easier to win the lottery than get a deal on the fiscal cliff. did you watch that news conference yesterday? was it any different than the last one or the one in fr the la from the last two years? telling everyone again up to 250 you get the tax break? all the same stuff.the last two? telling everyone again up to 250 you get the tax break? all the same stuff.last two yea? telling everyone again up to 250 you get the tax break? all the same stuff. same tone, same people. >> did you see this, obama is flexible on highest tax rates. >> administration official. white house officials later signaled that. he didn't signal it in anything he said. >> i spoke to a couple who were at the meeting yesterday, some of the executives, who felt, and this is like the implied feeling
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that he was now more willing to deal on the highest rate. >> did you hear anything about spending cuts or entitlement reform? >> two conversations are taking place. one if the public trying to get them behind you. the other is whether you're actually saying to the people you're negotiating with. and when you saw the signal, it was like, okay, maybe they'll get to that, i don't know, 37% or 500,000 or something. what we had been talking about two weeks ago. maybe that's where they're headed. stocks did gain ground on optimism around the idea that we could reach some sort of a deal to overt the fiscal cliff. the dow closing more than 100 points higher after being down by more than that during the session. a swing like that hasn't happened since october 2011. u.s. equity futures at this hour actually higher.
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up by about 65 for the dow, s&p more than 7, and as joe mentioned, the fiscal cliff is still the focus. today treasury secretary tim geithner will be meeting with congressional leaders. first harry reid at about 10:00 and then followed by a session with john boehner, eric cantor, paul ryan and chairman of the house's tax writing ways and means committee dave camp. also lunch with republican senate minority leader mitch mcconnell and nancy pelosi. yesterday a number of high profile corporate leaders met with president obama at the white house, including lloyd blankfein. >> both sides have acknowledge there had is revenue concessions and entitlement concessions. in fact if you listen to it, again, i'm not a master of the
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political art here, but i would say if you have these point of views in a business context, i would say a deal would be in reach. >> among our guests this morning, we have ron johnson. at the white house today, president obama will host mitt romney for a private lunch. it's their first meeting since the election. and this his victory speech, obama promised to engage with romney and consider his ideas. >> a lot of people didn't think the lunch would ever happen. >> interesting if he's going to be talking about ideas, mitt romney's idea had been to reach some sort of a cap on it 00 mem deductions. >> he would have just extended the bush tax cuts and then the other stuff would have been -- but if romney had been elected, whether bad long term to extend them, that's one thing, but he
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would have extended -- this is a weird argument to be having to have everything hinging on on the 2% that are -- suddenly as i've said before, suddenly everybody loves the bush tax cuts. so weird. >> flips the tables on who likes what. >> it all goes back to the line in the band. obama first time around caved and his base never for gave him for extending the bush tax cuts when he said he wouldn't. >> maybe the republicans should be reconsidering the tough line that they drew back in july of 2011 because this is a situation where i think it was kennedy who always said don't let the perfect be the enemy of the good. they were in a much better bargaining position then than they are how. that's when 3 to 1 was still on the table. >> you can't get through it house. >> yes, but the conversation has changed. and you hear republicans who have even changed. >> one guy, cole. ron johnson will tell you it has not moved. >> there are a lot of republicans signaling, yes, they
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think the highest income rate will go up. >> but if you can't get through the house -- a lot of people now that think and i heard it the other night that if you give the deductions now, that they'll just do rates next year. so you might as well give rates now. >> although maybe buffett was right when he talked to us yesterday and said you can have some sort of agreement that looks reasonable for the majority of people this congress, but the right and the left wing extremes could keep their leadership -- >> we're sitting here talking about two percentage points on 2% of the people and we're not talking about entitlement reform or simpson bowles. we're so far from simpson-bowles at this point. >> where is your button again? >> i told you, i can't in good faith wear the button when -- you know who i don't think is rising above. i've given up. because they're thumbing their
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nose at me from pennsylvania avenue. >> you're not wearing yours either. >> among the voices weighing in on what heeds to be done to overt an economic stas disasterl volcker. i asked him if he thought we were going off the fiscal cliff. >> what are you going to do? you know what you're going to to on the tax side. that's simple. you have to pass a law that says the present law has to be overridden. the argument is whether it's overridden for people over 250,000. >> and what would be your position on that? >> oh, i think the simple thing to do, obviously do what the president is saying. he ran a campaign on it. if you have to act in three weeks, you're not going to revise the whole income tax code in the next three weeks. all this business about deductions may be perfectly
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legitimate and i think that both income tax -- personal income tax and corporate income tax need a lot of thought and a lot of revision. they're both broken. but you're not going to do that in three weeks. the challenge that i see is in three weeks you've got to have some convincing balance of the tax side, the revenue side, with the expenditure side. you can't change the expenditures in three weeks. you can indicate intentions, but you can't -- >> we'll have more of that conversation throughout the show including interesting comments he has about bernanke and interest rates and what's going on in washington beyond the fiscal cliff. he's got lots of views. >> does he pull punches about bernanke? >> there's a couple comments i think we'll run in the 7:00 or 8:00 hour, he's diplomatic about it, but if you listen very carefully, i think you know where he stands on a lot of the stuff. he talks about the punch bowl
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and having to take around the punch bowl before -- >> the lead story in the journal -- >> the fed stimulus. we're back again. >> operation twist is supposed to be up january 1st. >> he's also got interesting theories on the volcker rule and banks still. so we'll be running some of that throughout the broadcast. in corporate news, rio tinto plans to cut cost and sell more assets. and two audit firms are now being sued regarding the acquisition of hp. shareholder law side has named deloitte and kpm claiming they missed numerous red flags.
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board of directors also named. >> a magnetic lawsuit. you see the press release go out and someone has to boiler plate to say, okay, we're the accountants, we're the bankers, here we go. >> if it's fraud -- no one is calling it that, but that's hard for anyone to see. the accounting firms, the acquiring company. >> i'm still amazed that mike lynch is out there. >> what are you saying? out where? as free man? >> no, he's come on cnbc, he's talked to the press. all a journalist, i'm thrilled. >> that's an old emploploy.
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if you hide, you're guilty. wells fargo says it won't face sec actions. they closed its investigation and doesn't plan to recommend any enforcement action. has wells ever gotten a wells notice, would they call it something else for wells fargo? that's complicated. like yesterday saic sending a note to -- sec sending a wells notice to saic. did they just say okay you're do that and we're sending you one? they didn't come right back with that. >> someone at the sec would have gotten confused. >> when you say it, is sounds like saic, sec. if english wasn't your first language, you wouldn't be able to hear -- >> if you were starting a hedge fund, maybe this is the way you should think about naming it. >> that's an idea. what's left, sic, suc -- as a hedge fund, you probably don't want the name suck.
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anyway -- >> soc, sox. syc. >> i don't want to invest in a sick fund either. >> let's tee a look at the markets. futures are indicated higher. we'll be getting a lot of numbers today including the same store sells. we'll be getting those throughout the morning. costco reported a day early. we'll get numbers throughout. if take you a look at what's happening in europe, you'll see that right now they are following our lead. if france the cac is up by 1%. ftse up by 0.9%. dax up by about $0.75. in asia, kospi up modestly.
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and in shanghai, the composite there moderately weaker. you can see oil prices are up by about $1.07. no the really sure what's wondering about the oil prices. if we see some sort of a qe 34, that could have a big impact on a lot of commodity its. take a look at the ten year thoet. the yield at 1.637%. the dollar is down against the euro. 1.2982. it is up against the yen and the pound, though. and gold prices this morning up by $7.40. >> time for the global markets report. kelly evans is standing by in london. >> joe, don't sound so excited. i know this is the highlight of your morning. >> that was the best could i do,
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best ted baxter in terms of faux excitement. sorry. >> i'll give you a couple of things to be very excited about. the first is the green you can see behind me on the map. joe, pretty much no region spared from the broad based rally which is this part being attributed to the comments. u.s. popped on fiscal cliff talks. for now markets like what they see. the exception as becky noted was the shanghai comcomposite, ugly ugly. it has continued to sink. in the meantime want to draw your attention to the bond wall because if you look at spain and italy, we've seen yields come down quite a bit. 5.25% is the level on the spanish ten year. 4.535 on italy. italy also auctioned off five and ten year debt. france and belgium seeing uncertain thunmad
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uncertain maturities. now, want to draw your attention to uk banks. we're waiting in just about two hours the levinson report on press ethics that was spawned of course spurred by the phone hacking. in the meantime bank of england's report on financial stability that caught the market's attention. strong words about banks needing to raise capital. that's still going on. hearing from paul tucker who was passed over for the next boe job. for the most part still seeing green arrows across the board. what accounts for the fact they're doing so well? for one we've known these concerns are going to be out there about regulators pressuring banks to raise capital. secondly, the levels so far that are being discussed don't appear to have investors spooked. so keep an eye on the uk banks. but more broadly speaking, doesn't look like much that will
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stand in the way of the rally. for now, joe, back over to you. >> okay. see, i don't think you sounded anymore excited sending it back to me than i did sending it to you. really, did you? >> i thought it was only fair. >> quid pro quo. you're right. i got it. >> you are a really good hanibal lector. >> coming up, regulatory officials telling cnbc the volcker rule draft is not expected until the first quarter of 2013. we have an interview with the former fed chairman himself. that is next. but first as we go to a break, take a look at the rockefeller christmas tree lit for a tthe ft time last night. >> takit is a beauty. >> paul volcker's office looks right over it. to his underarm.
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u.s. equity futures, we have green arrows. 72 points higher the dow looks like would open right about now if we did it. let's get you through some of the morning headlines. disney increasing its annual dividend by 25% to 75 creents. shares during the last year, take a look at that chart. not a bad stock to have been in.
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looks like -- i was going to make a reference to roller coaster. but space mountain goes up and down. >> it's all in the dark, too. >> but you often feel in the markets that are you in the dark. joe, what's going on in the weather? >> it was cool this morning. >> cold. 20s. >> 28 degrees. >> do you want to do the weather is this. >> no, i think we need a professional which we have right how. not only a professional, but a professional with -- if you want to be an actor or something, reynolds wolf joins us now from -- >> that's the actual name, guys. i'm throwing it out there -- >> i need proof of that. >> that is the actual name. reynolds scott wolf. that is the birth that i aname. a lot of moms will give their first born son my maiden name in the south. my mom's maiden name is reynolds. >> that's the case with my son.
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scott. it is. >> reynolds, people ask me all the time, too. becky quick i swear is my name, it too. >> becky quick would be great for a racer. >> enbetter, my mom is sue quick. she should be a lawyer. >> most men probably wouldn't want to be called quick. anyway, reynolds, go ahead. >> exactly. lake effect snowfall in parts of new york, but for much of the eastern seaboard, pretty thighs. we'll see fairly dry conditions for much of the southeast, also, but when you make your way across the nation's midsection, things begin to change up a little bit about that we do the lake effect snowfall in parts of the theft. still dry for the southern plains. travel plans will be okay. no issues. but then you get out to the west and things get dicey. we'll see rain from seattle southward even into san francisco and the bay area. high elevations, the mountains, you can see snow around 7,000 feet or higher. by the time we get to the end of the weekend, you could see
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several feet in some spots. so how will it affect your travel? you can expect again all the issues out west. san francisco, seattle, that's where you'll have all your issu issues. new york and atlanta, should be smooth sailing. back to you guys. your turn. >> reynolds, thank you. and thank you for always playing with us. >> you bet. whatever it takes. >> in squawk sports news, negotiators returning to the bargaining table for the nhl. outside mediation voices also contributing to the talks. the location was kept a secret and so was what was sgudiscusse around the table. the talks went well enough that all sides will be back at the table today. and the sports story of the datas us to rutgers and louisville squaring off tonight. scarlet knights will look to earn the school's first bowl berth against the cardinals team.
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yes, i'm going. >> what time is that game over? >> i don't know. starts at 7:30. >> where are you going to? >> rutgers. >> don't dangle your participal. >> if i was a graduate of rutgers -- >> then could i understand it. >> tim pernetti could squash you. >> he could. louisville is pretty good. >> tonight 7:30. >> i'd like to to watch that. but it's late. right? but -- >> you can still come. >> no, it's cold. >> you could get indoor/outdoor seats. >> we sat down with paul volcker yesterday covering everything from the state of banking industry to the fiscal cliff. here's what he had to say about the banking industry's reaction
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to his name sake volcker rule. ahead of yesterday's reports that regulators -- those regulations will not be in place until at least the first quarter of 2013. >> i don't know why they tonight have the new regulation out. there were some little carve outs in the legislation at the last minute, but i think it's effective the way it's stated. it's stated pretty broadly in the law. whether the regulation has to be as complicated, i don't know what the new regulation would be. but i don't think it needs to be as complicated as the initial regulation which got a big reaction. >> are you frustrated by that? >> not particularly. i think in effect it's been effective. banks have stopped straightforward proprietary trading operation and the only question is how much proprietary trading might get mixed up in the market making and customer
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trading. they've largely cut back on their then funds and equity funds, a little more leeway in the law at the last minute than i would have preferred, but basically that's accomplished. and the outright trading is accomplished. and the managements and directives finally understand that, yes, this is a law that has to be followed, they'll be able to manage the trading desks i think in an effective way. >> were you surprised at how aggressively the banking industry fought back against the volcker rule and some of the things people said both about the rule and frankly about you and i think of some of the comments people like jamie dimon made? >> this is not just the banking world and the world of finance. but it's always been true and it's just gotten accelerated with the amount of money involved. once lobbyists get their teeth in it, they fight harder than
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the management that may have hired them in the first place who just wanted to do something, but it's one of many issues they have. you give to a lobbyist and say do something about the volcker rule and dodd-frank. you got 400 lobbyists down there making a living doing this. and the whole thing kind of gets put out of context. i asked the banks, you know, you got a different approach in england particular and potentially the continent in europe to separate out all the investment banking functions from the commercial bank. and keep them in the same holding company, but have a wall between them. bring friends. p wall sounds stronger than a ring fence. but then they have to decide you can't disentangle it entirely. and you have to say which transactions can cross the border or choke the fence and which complaian't. they never really defined that yet. and i don't know whether they can sustain that position.
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it's another approach if there's any problem including the cultural problem. >> in the next hour, volcker's thoughts on the state of the banking industry and fed policy. and his comments on bettrnanke were perhaps the most interesting. he'll say stimulus continuing worries him the most. >> the lead story in the "wall street journal" lays out the idea that right now they're spending $40 billion a month on one set of stimulus, twist skektsed e expected to end. even though they've run out of the short end securities to transfer into the longer term one which is means they would actually have to really print money to make this happen. let's get back to the fiscal cliff issues. earlier this week, tom cole urged his leadership to yield to
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demands. that would go against the grover norquist pledge not to raise taxes. but one of those who signed the pledge is standing by his promise. senator ron john so thson joins. senator, thanks for being here. >> good morning. >> senator, we've been following all of these negotiations as the market has turning on every single bit of information that comes out. you say that you would not go along with any idea to raise those marginal tax rates. why is that? >> because everything we should be doing here should be concentrating on economic growth because that's time as more effective. let me give you a couple numbers. even with the very meager recovery that we've had, revenue has increased to the federal government by $344 billion per year. if we just return to a normal economy like we had in 2007, those policies of george bush where we had 18.5% of our economy coming to the federal government as revenue, that would be another $419 billion. so combined, that would be $750
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billion per year of additional revenue. now, president obama's proposal of punishing success, it's hard to say exactly what it will be, but somewhere around $75 billion. it's a tenth of what we get with economic growth. and the rob with punishing success, with increasing marginal tax rates or really increasing taxes, is you put at risk that growth that is ten times more effective. so again, i'm just looking at what works. and we need to calm the markets. i don't want to play brinksmanship. it's a unfortunate that the president really isn't negotiating in good faith. he's just moving the goal posts. >> although the lead story on the "wall street journal" is about how the president may be relaxing that position. he may not insist on returning to the pre-bush tax cut rates for those wealthiest 2% or whatever the situation is. that may not mean that he's not looking for some increase in the marginal rate on those people, but if he steps down from that,
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would that be a position because again when you're reaching across, do you believe in any sort of compromise on this? >> again, we should be compromising on exactly how do we reform our tax code. simplify it dramatically so we can recover the $200 billion to $300 billion in compliance costs and pro-growth tax reform where you lower marginal tax rates by broadening the base. i'm all for elimination of special deals. even without doing anything -- >> are you pro simpson-bowles? >> the problem with simpson-bowles, it doesn't address the main driver of our debt which is the health care problem. >> would you be for everything either in simpson-bowles to get us to the point where you can talk about the health care issue? >> there are pretty good parts of simpson-bowles. a structured approach to how you actually save social security fp that's a good thing. certainly some -- >> what do you not like in simpson-bowles? >> in terms of the way they approach taxes, unfortunately, they on a static basis required increased rev new and that's not an effective way of increasing
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revenue. i'm a small business guy that had to make those capital equipment investment decisions. when you increase the marginal tax rate or if you limit -- >> simpson-bowles raises things like capital gains and dividends to 28% along with ordinary income, but it lowers the overall rate to 28%. >> i understand. but in exchange for lowering those rates, it did try and increase rev new bydrill trillion dollars on a static basis. you need grow the economy. >> the question is can we grow the economy like we have in the past. some people question whether 2007 was just a big bubble. you're right the 8.5% in gdp is his totorically what we bring i but you have to find some way to change the deficit and we have for the got p baten back to any of growth.
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>> it's because you all the borrowing has scared consumers, scared business investors. so what you really need is if president obama ran on a balanced plan, okay, he won, so maybe the reality is some tax rate will question up, but the problem with that is our deficit last year was $1090 billion large. my point to president obama is where is the other part of your balanced plan. how are you into to go restrain or close the additional trillion dollars worth of deficit. >> you want to see entitlements tackled. in th if that were the case, would you then go on the tax rate on the richest americans? >> i'm not going to answer hypotheticals and negotiate here on the set. what we need to do is see the president's plan. i've done enough negotiations in business to understand who is negotiating in good faith wlorks is moving the goal posts. i think it's time right now for president obama to show the american people his full balanced plan. we haven't seen it.
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democrats haven't passed a budget in over three years. there's not one democrat that has voted for a plan yet. until republicans see the plan from the president, from democrats, it's very difficult for us to be compromising if anything. right now we're just negotiating with ourselves. that's really a pretty bad negotiating strategy. we should stop doing that, we should be talking about not playing brinkmanship. what we should do is extend all the current rates permanently. that would return certainty to the economy. it would restore confidence. and that's probably the biggest thing we need to do to grow our economy. let's quit having these fiscal cliffs. and let's not be threatening government shut downs. let's sit down in a good faith effort and that's what president obama is not doing. he's back on the campaign trail which will is unfortunate. he should be in washington here sitting down in a good faith effort to try and grow the economy. because that's ten times more effective. >> senator, what are the odds that you think we reach an agreement before january 1st? >> that's just hard to say. there are enough republicans
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that are showing a willingness and i'm certainly willing to sit down with anybody who is willing to negotiate in between faith. my guess is we probably will get it solve, but i hope item not done in a way that harps tms th economy. but the president has to show us his balanced plan. >> as you said yourself, probably not the way to do to negotiate either on television or in front of everybody. that's probably happening behind the scenes. >> becky, that's not negotiating. that's called putting your plan on the table. republicans have passed two budgets. we have a bipartisan plan to save medicare. we've passed cut cap and balance. the democrats have shown us nothing other than how them's increase taxes by about $75 billion when economic growth will return $750 billion. >> ron, try that line, here's the pen, i'll sign it if -- say i got a pen i can lend you, mr.
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president forks that pen that you have that will sign -- i let him have the floor. i can say what he said. but $75 billion. we're doing back flips about $75 billion and we have a trillion dollar problem. but that's all you hear. people nodding behind him. $75 billion out of a trillion. that's all we're talk about. and no interests in talking about anybody else. >> and they take entitlement reform off the table. labor leaders were pleased when they left the white house. president obama, show us your plan, show the american people your plan. >> senator, thank you. >> thank you. coming up, what negotiations in washington mean for trading on wall street. we'll ask the man who manages more than $150 billion next.
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welcome back. we talked about the fiscal cliff. today we have cliff noran, $154 billion in assets under management. and as joe was saying during the break, we have a little bit of a drinking game. every time we mention fiscal cliff. a lot of viewers are kind of drunk by thousand. >> i'll toast with them. >> are you up in boston? >> springfield, mass. mostly bonds. we specialize in corporate bonds, real estate. >> so what are you doing about the fiscal cliff? >> we think it's actually a good thing because it's addressing something in our country that's gotten out of control. step back the last five years, september 2007, we crossed $9 trillion in debt. thousand we're at $16.2 trillion
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to $16.3 trillion four years later. five years later. deficits of 1.25 trillion for the last five years. so we have a problem in our country that really needs to be resolved. we've become addicted to stimulus really through deficit spending, through 0% interest rates. >> how are you investing around this? >> we're comfortable investing in corporate bonds. bond spreads have tightened, but investors still being paid on a reasonable basis. we have structured products like clos. >> do you care if we go over the cliff? >> it's a concern, but i think it's actually not that much of a concern to me, no. >> so it's okay? >> we look at the fundamentals of companies when we invest and the fundamentals of companies are very strong. probably will affect the stock
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market more than the bond market. >> and so ultimately you really don't care. >> i'm agnostic to it. >> this is like the first person we've had on the set that said he'sing a n ing agnostic. >> you would almost like to say that it might even be a positive. >> i think that's what he is saying. >> it's really addressing the problem of the country that nobody is talking about. what about the debt in our country? what is it doing to our country? look what we've done the last five years. politicians need to come together. this is not a republican issue or democratic issue. is this an american issue. we need to fix this. >> and if you just keep delaying, delaying, that's doctor we have these -- the stuff we put into make sure we did something. he said he was agnostic. his name is cliff. >> growth would help our
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economy. we need more pro-growth initiatives. we need to address austerity. we need a combination of both. >> are you more of an austerity guy or growth guy? >> we need both. both are very necessary to fix our economy. >> and cliff, listening to this endless debate about 250 and above and a couple of percentage points on the marginal rate that races raises $75 billion and no leadership on entitlements or the fiscal abyss, not the fiscal cliff, no talk about that. just about making sure get back to that clinton -- it's unbelievable. >> the fiscal cliff is the big topic today. next year we'll be talking about the entitlement cliff. that's the big problem. >> thanks for coming in. >> if you have any comments or questions about anything we've been talking about here this morning on squawk, e-mail us a at squawk at cnbc.com. when we come back, why net jets is ordering hundreds of new planes. [ male announcer ] introducing the new dell xps 12.
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you can stay in and share something... or you can get out there and actually share something. ♪ the lexus december to remember sales event is on. this is the pursuit of perf do you think this group of people is going to find some common sense solution? >> yeah, i think they will. i'm not sure they're going do it by december 31 cents. >> we know what the consequences are of the failure to reach agreement and we know what the opportunities are if we do. >> they don't want to negotiate in public. but in my view they'll get to
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something shoo we encourage congress to putz aside the political rhetoric and rise above it to make sure we have revenue necessary in order to move this economy forward. jet is ready to take off. get it? today they're updating its fleet, taking delivery of its new global 6000 stooers aircraft. basically buffett just likes to taunt me. and i guess after i ask him for a card again yesterday, he said, i've got an idea. jordan, go in and sit on the set and just show him this new jet he'll never fly on. did he do that? >> he called me last night and said you've got go. but i brought this because you've said it so many times. this is the first global marquis jet card. it has your name on it. >> let me have it. >> there you go.
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>> this is card that's invalid because we're not selling them. >> it's not good for anything, is it. >> it's good to show people. >> to show people. when i go to like teterboro and i walk in there said and do you have any private jet, here's my card, will this work? will they take me seriously, or will they -- >> i wouldn't show it to security. it looks real. >> right now i have a brick now and a useful card. >> sign the back. it looks legit. >> you don't sign it. once you sign it, anybody can use it. i learned that. >> congratulations. >> thank you. thank you. you have a -- really, seriously, sincerely, thank you. do you have any new -- this is a signature net jet model that is -- you said bombardier? >> bombardier 6000. >> it's like a global express, which is better than a g-5 or comparable. >> that certainly is our opinion and we improved it as you
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suggested. >> how? >> sound baffling, better sound systems, better seating. >> free wi-fi? >> free wi-fi. the whole kit and kaboodle. this is the way to travel. >> how does that sound? >> sounds fantastic. >> we need to know. >> is that what we're looking at? >> it should be. the global 6000. they're taking delivery today. >> are you getting rid of some old? >> yeah. we'll sell some. >> which ones. >> we'll sell some and others. >> how much are you paying for each one of these? >> that's a secret. >> are you actually buying them? >> oh, yeah, we buy them or set them in parts. e. >> during the crisis there were people writing down tail numbers
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and seeing who was on them, who was spending money. >> that's one example or if someone's doing a deal and they want anonymity. >> so the number can't be tied to them. >> that's exactly right. corporations will use us for a lift. it's an incredible efficiency tool. >> at what point does it make sense financially to own your own plane or to use you? >> it depends on your flying patterns. if you fly more than 700 or 800, it probably makes sense to own your own. >> who was the guy before you? i know him, the gentleman before you from netjets. >> richard san tooele. >> there was a rough patch for the operations for the -- i guess it was the income statement of net jets because i guess everything got marked down. >> we felt the same pressure everybody did in '08 and '09.
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>> where are you now? >> we're doing well. >> you're making money. >> yes. i couldn't be more proud. what a great team. >> 2012 fwhaerbetter than 2011? >> yes. >> we talk about it on the set. landing fees and that, where are you at on that? >> well, it depresses the market, the economic activity. we want people to use this product. if you discontinue, it adds costs. >> you're not willing to rise above? >> we're willing to look above a whole bunch of things. >> it is caving to what the president mean. is that what rise above means? raising taxes? >> no. but we keep trying to get rid of the deductions. some people would argue this is a special deduction. >> the one thing, is there any reason why a fortune 500 ceo can -- should anyone look at him if he's flying private as if he's
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-- that's some type of luxury that's over and above what he should do? should he be waiting? >> i can't imagine a fortune 500 ceo being canceled on a united flight or delta flight. i can't imagine waiting. >> it's not each that. the schedules they keep are so grueling. they've got to be on time, on their game. >> yet you're still a stigma for certain elements that zig ma tiez ceos flying on corporate jets. >> there are things that signify things that make sense. >> if you go to washington for a meeting and you fly down on a private jet, you're going to hear that you flew down on a private jet instead of taking a greyhound. >> we did go visit -- myself and another group came to the white house and came in on private planes waend told them that. >> all right.
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jordan, thank you. >> thank you. >> thanks for the card. >> you bet. >> really. coming up, we've got allstate's ceo and a lot more after the break. i need to rethink the core of my portfolio. what i really need is sleep. introducing the ishares core, building blocks for the heart of your portfolio. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal. those little things for you, life's about her. but your erectile dysfunction - that could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity.
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rising above to find solutions. all state ceo thomas wilson gives us a progress report on what washington needs do now to boost the nation's confidence. >> trading tips from the experts. what you need to know before the trading day begins. and more of our exclusive sitdown with former fed chairman paul volcker. >> it sounds like you'd take the punch bowl right about now. >> get his thoughts on the current fed and the statement financials. the second hour of "squawk box" starts right now.
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good morning and welcome to "squawk box" here on cnbc. i'm andrew ross sorkin. joe kernen is over there. beck request quick is right there. take a look at the futures wchl dough have some green arrows, so the market looks like it's setting up nicely. 67 up if we open on the dow now. as does the nasdaq. here are the headlines. they're accusing the awe it firms of missing many red flags. in addition to deloitte and kpmg, hp's directors, officers, and former directors are also named in the suit. hp took an $8 million write-down on autonomy on what they're calling improper accounting. and wells fargo will not be facing any s.e.c. action.
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they say it's been told that no enforcement action has been recommended. and i didn't win powerball and becky didn't win powerball and frankly you probably didn't either. two won powerball in arizona. we have to congratulate them. 58 winners of $1 million prizes came including 12 in new york and new jersey, in the tri-state area here. >> don't throw your tickets out just yet. >> a million bucks is not something to sniff at. the people who won, the big winners, how much did they actually get? >> i don't know. >> do we know? do they each get $200 million? >> number it's less than that. you have to take the 1 million dollar winners out and after tacks it would only be $220 million after taxes anyway. >> what a waste. what a waste. >> no, no, no. it's still big numbers. we've also been talking about the fiscal cliff.
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president obama hopeful that it can be reached before christmas. eam eamon has more on this. >> for the past few days i've been on air explaining why markets are wrong to react to the washington boilerplate headlines. that's washington boilerplate but we did get some comments here last night in washington with lloyd blank fein and john harwood on air that i think are significant and will move the needle here on this deal. take a look at how lloyd blankfein said president obama explained it last night. >> the president was, you know, gave us a lot of time. he and the staff went through a very detailed plan of what the plan was for balancing the
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budget. devil in the details. there was a lot of details, and i would say i think there was a lot -- it was very credible. >> now, the political significance here of the head of goldman sachs calling the president's plan very credible is probably great news for the white house. it gives them the type of political cover they were look for from the ceo meeting. if you're a neutral person who doesn't care what the particular deal is and you're rooting for a deal, it's a positive for you, a positive for the white house, but a negative for republicans who wants to see a deal that does not include a deal with increase in tax rates. lloyd's comments put the pressure back on the republicans a little bit and take a listen to what he said about whether northor not we can actually get to a deal. >> at this point both sides acknowledges that there's going to be revenue concessions and entitlement concessions. in fact, if you listen to it, again, i'm not a -- i'm not a master of the political art
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here. i'm in washington. but i would say if you have these point of views in the business context as close as they are, i would say a deal would be in reach. >> that's another optimistic comment there from lloyd blank fein, obviously a guy who's been in a lot of high -stakes deals. i think those two comments are the kinds of comments that markets should be paying attention to and a lot of the political boiler plaplate situas are not what you should be looking to when you see at where the fiscal plate is actually going. the big question is why lloyd blankfein playing this position now? i remember when they were the pariah in this town. now he's playing more of a statesmanship role, guys. it's fascinating to see here in washington. >> yeah.
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it's weird, the dynamic, eamon, because there are strn constituents on the left that would look at lloyd blankfein saying anything, and immediately say, i want to do the opposite because he's a bankster. >> totally. totally. he's the guy that's a -- >> anything blank fine says, they would say it's coming from hell or, you know, from satan. >> they distance themselves from banksters and some of the criticisms is they were too cozy with bankers even though the right thought they were vilifying the bankers with dodd frank. >> right. but it's going to be harder for republicans on the hill to go against the ceo of goldman sachs saying, hey, look, the president's credible here and we're closer to a deal. that's going to be a little bit of an uncomfortable position
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because they do respect them much more than the president's political presence. so that's why it's tactically useful. >> he's a democrat. >> absolutely. >> so the republicans don't all of a sudden say, well, lloyd says, that we'd better cave. >> absolutely. i think it gives a political cover from the ceo wall street class that the white house was looking for. i think that's why the comments are significant. if you're looking for incremental comments, that's one. >> eamon, very quickly. you seem to be convinced that a deal is at hand. when is a deal at hand? >> i don't think a deal -- look. if i had a crystal ball, i would have won the powerball last night, which i didn't either. i think this goes right until the screening end. there's a lot of posturing that has to happen between now. i look at christmas, post christmas for a deal to actually come together. if not going over the cliff for a couple of days for tactical political reasons, remember,
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there are a lot of people in washington. wall street takes it as action owe mattic that a dow jones crash is a thing. there are plenty who don't see it as bad thing. they see it as a tactical process to get their way. i think we go right to tend or over the cliff here, still even though blankfein's comments are a signal that the white house has a hand in the negotiations, i think the negotiations are going to be very, very hard fought throughout the end. >> all right. thanks, eamon. our next guest met with john boehner on capitol hill yesterday. tom wilson is the ceo of the insurance giant allstate. i see in your preinterview notes you've got some good news, but the way you say it, i'm concerned about where we are. let me start with the good news which moons that there's some bad news. what do you mean? >> sure. i am concerned. the good news is -- and we met
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with the democrats who control the snachlt we met the republicans who control the house, the white house economic team. so we saw all sides of this. the good news is we all agree this is an opportunity to show the rest of the world we know how to run our house economically. they all want to make a deal, three, they all agree it's a $4 trillion number and four, they all agree -- there's three kmoents. we've got reform entitlement, raise revenue and reduce spending. so those are all the good things. you want to know the bad news. >> yeah, i guess. >> yeah. okay. so the bad news is nobody's really decided how much of that $4 trillion goes into each of the three buckets. so right now everybody's debating about tax rates or tax deductions. that's really a side show. >> i agree. >> the main stage here is really how much goes into each of those three buckets and what are we going to do today and what are we going to do tomorrow and how does that work out so that we
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get a deal by sometime early next year. >> you're talking fiscal abyss. we've got them all together. mine the fiscal cliff is january 1st. your $4 trillion deal is like a simpson-bowles thing. the fiscal abyss, i don't know if we know whether that's going to be a one- or two-step process. >> it should be a two-step process because you can never deal with $4 trillion in two weeks. >> they can spend $4 trillion in two weeks. >> they can and they have. >> and they do. >> yeah. so i think the -- what they need to do, though, right now is everybody keeps talking about the cliff as like here it comes december 31st. the reality is businesses today are acting as if this is going to happen. so this is not whether the dow goes up and down and that's the symbol of whether the markets believe in this. there are companies today that are not hiring because you don't run right up to the cliff and stop right on the edge. you start acting as if it's going to happen. and that's what businesses are doing. so the cost of delay goes up
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each and every day. >> if they don't have a deal by december 15th, i've always heard that's when you get complicated of trying to put in tax changes for the new year. i mean what do you see as the deadline? >> i think the deadline was several weeks ago. i was with a ceo yesterday who said he's going to his board today and he's going to cut over a thousand jobs, okay? >> wow. >> that's happening each and every day. and so, you know, to sort of say we're -- >> what are you doing? >> what are we doing? we're actually in pretty good shape. i'm concerned -- we have a $100 billion investment portfolio and unlike a person who has a big bon bond portfolio, i am concerned about the fiscal cliff. >> are there any preparations you're making in particular? >> we've been reducing our risk on interest rate sides because particularly when this thing blows up, you don't know where it's -- >> you're not cutting people yet? >> no, we're not cutting people.
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>> are you planning to do so? >> in our business we're not as affected by consumer buying because in most state use have to buy our product. so we'll continue to sell the same amount of business we sold before, so we do not have to cut people as a result of the cliff. >> hey, tom, when you hear all the negotiations, the bad news is everybody's trying to figure out which amount of each of these three buckets that you mentioned things should go into. dwlou see a compromise working out, particularly when you hear on both the far right and the far left this idea that we don't want a compromise, we want it our way? >> i think idea that you don't want to compromise is just a dumm idea. i mean if we go over the cliff when we go into a recession, wealthy people, you know, my stock portfolio will go down, but i'm going to be fine. your portfolio will go down. the people who get hammered in this are the poor and the elderly because they get permanent setbacks. so whether you're right or left, everybody knows we need to take care oif those people. so i think that's a bad idea.
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i think what they need to do to get going forward. neither side wants to say what goes into each bucket. they all say i put something on the table and i got my number. say add it up to $4 trillion for me. >> that's a good point. >> tom, right after sandy, a couple weeks ago or three weeks eeg y ago you were talking about sandy being twice the size of katrina but the wind speeds weren't as much and it wasn't going to affect all state. did you see christie and cuomo? are those real numbers? is that what they'd like to see from the feds or is it worse than what you thought on november 1st? itz's worse than what we thought out. it will cost us 1 billion 75
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doll lars. it is a significant event. it's significant flooding. that's not typically konked by us but by the government if you buy their policy. unfortunately very few people buy coverage. so unfort flatly there's a bunch of people whose homes got wrecked and that's what cuomo and christie are seeking. our government has a hit of going back to the state and saying, sorry you didn't buy insurance, here's some money and they'll do it again. they're trying to negotiate as to how much they get. >> allstate's ceo tom wilson. we appreciate your time. >> thank you. when we return, we'll have gene ludwig. he will be our special guest. also at the bottom of the hour, we'll talk oil, gold, and more with the "squawk" trading block. find out where traders are putting their money right now. "squawk" is back right after this. comments, questions, send
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them to @"squawk"cnbc on twitter. follow the show and look for updates from andrew, becky, joe, and the "squawk" staff. "squawk box" on cnbc and on twitter.
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welcome back, everybody. watch shares of tiffany. they're coming in with earnings 14 cents shy of what the street
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was expected. revenue also missing the mark and the luxury retailer is cutting its full year's forecast citing global difficult weakness. it also says it saw weaker profit margins. >> okay. we're whack with more of our exclusive interview with paul volcker. here's what he had to say with the state of the banking industry as it stands today. >> in a state of transition. it's been somewhat chastised. it's getting back normally now and beginning to make loans again, which is a good thing, but i hope some lessons have been learn ed, complicated new laws, property requirements and all the rest. we've got to settle down, we've got to complete the volcker rule. it's very important. the most important single thing
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which think needs to be dealt with in a convincing way, it's in the law, there's got to be in other countries' laws too. what do do you with a failing large financial institution? and there is a procedure set out that says you've got a failing institution, that institution will at the end of the day be liquidated and stock holders will lose. but liquidating might mean merged or pieces of it sold off, but the government will take it over and provide some transitional support to maintain continuity in markets. but you'll go through a modernized bankruptcy procedure. that's met with a lot of skepticism. >> that was his take, and we're going to get his thoughts on fed policy and the fiscal cliff later on in the program, but now our next guest titled they need
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rainy day funds. gene ludwig is now the ceo of the financial group. good morning to you. >> good morning to you. >> you were in an op-ed with paul volcker. before you get to the issues that you raised in the op-ed, your view of the banking industry right now, i was surprised in the conversation with the chairman that he actually thinks that the banking industry has actually probably changed more than the public thinks. >> it's a healthier industry for sure. healthier certainly than pre2008. and it's adopted a lot of rules. the industry's good at dealing with rule-making and it's done a good job. >> but to me the biggest difference was the culture. he was not going so far as to say the culture of wall street had changed completely, but in many ways it's at a different place. is that the right way to thinking it or worse. >> certainly improved. things were better today than
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they were before, but like any human endeavorer, nothing's perfect. >> i spoke with him at length. we're going to show some of the tape later on in the program. you spend all your time in washington these days we had lloyd blankfein on a little earlier. in terms of an impact on the cliff on banks and banking. >> we've really got to move past the cliff. banks are stronger, but every part of the american economy is affected negatively by getting close to this cliff. every day hurts us. both sides have got to come together. i think -- i agree with lloyd blankfein. the president's proposals are credible. they're excellent. we've just got to move along. >> we keep hearing different ceos talking about their preparations in advance of the cliff if we go off -- if we go over it, j heard from a ceo talking about another ceo who says he's already planning to lay off a thousand people. another ceo plans to lay off
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10,000 people. you talk inside the boardrooms of wall street banks. what kind of plans are being made right now? >> these are tough times, you know, for banks, even though they're doing much better. their earnings are anemic. everybody's quite concerned and they're making preparations. >> what do those preparations look like? >> well, they're being more cautious in lending for sure. they're more cautious thanning their general counterpart activities. it not only hurts them. every day people become more cautious, pulling their horns. it hurts. >> you want to change the accounting procedures for how banks deal with them. i think your gaumt is you make the system safer. make the argument here. >> well, andrew, it's so easy. we all sensibly want to have rainy day funds to protect
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ourselves for difficult times. this is an odd area where because of the accounting rules, banks are prohibited actually from putting away as much as they'd like to put away for a rainy day, and at the end of the day when we do get rain and we always get rain from time to time, it means that if the banks don't have the protection, we have the same kind of situation we had in 2008 where the taxpayer ends up paying. not a good thing. >> we've had a lot of voices on the show ask for that. it was something a former s.e.c. chair put in but it had this unintended consequence of being the worst possible thing that could be set up. i don't understand why we have to address that. we have heard a lot of people, very credible voices have come on and said just that. >> well, becky, i couldn't agree more. this is a silly thing that can easily be changed. now's the time to do it while things are a little bit better. that's why we wanted to get this article out. it is a perfect time to make this change.
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fasb is looking at it. we could make the world a better place by making this change. >> gene, we appreciate your time this morning and glad you're putting this issue bag on the table. >> thank you. good to be with you. >> absolutely. good to be with you. check out oil at this hour. we're going to be hearing from the "squawk" trading block in just a few minutes when we return. >> time now for today's aflac trivia question. what is the name of a popular fruit-filled hanukkah pastry made with cream cheese dough? the answer when cnbc's "squawk box" continues. electricity? dental bills... gazooks. you need a back-up plan. [ santa ] ho, ho, ho. that's why we have aflac! so i'll have cash to help pay bills! great...but what if you're still not better by christmas? hmm... afllaaccccccccc!!!!!!! [ male announcer ] aflac. we've got you under our wing. rudolph's better... but now blitzen's sick!
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and register your purchase online. have a super sparkly day! ok. [ male announcer ] now all you need is a magic carriage. citi price rewind. buy now. save later. well, having a ton of locations doesn't hurt. and a santa to boot! [ chuckles ] right, baby. oh, sir. that is a customer. oh...sorry about that. [ male announcer ] break from the holiday stress. fedex office. [ female announcer ] today, it's not just about who lives in the white house, it's about who lives in the yellow house, the green, and the apartment house, too. today we not only honor the oval office, but we honor the cubicle, and the home office as well. because today it's about all of us. and no matter who you are, you're the commander-in-chief of your own life. ♪
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now the answer to today's aflac trivia question. what is the name of a popular fruit-filled hanukkah pastry made with cream cheese dough? the answer? rugalah. >> aflac. huh? >> you got comments, questions about anything you see here on "squawk," shoot us an e-mail @"squawk" cnbc.com. coming up next. your tools of the trade. we're going focus on oil and gold. "squawk's" back with that and a lot more in two minutes. time f. because your daughter really wants that pink castle thing. and you really don't want to pay more than you have to.
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only citi price rewind automatically searches for the lowest price. and if it finds one, you get refunded the difference. just use your citi card and register your purchase online. have a super sparkly day! ok. [ male announcer ] now all you need is a magic carriage. citi price rewind. buy now. save later. [ male announcer ] this december, remember -- what starts with adding a friend... ♪
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♪ ...could end with adding a close friend. ♪ the lexus december to remember sales event is on, offering some of our best values of the year. this is the pursuit of perfection.
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welcome back to "squawk box," everyone. in our headlines this morning, it is the busiest morning of the week for economic numbers.
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we're just an hour away from the labor department's weekly report on initial jobless claims. also this morning, october pending home sales from the national association of realtors. economists are expecting that to increase by 1%. plus, we have many of the nation's big retail chains out with the figures. targ target, macy's and gap are those that should be reporting within the next hour. and also we should mention ws and the stock taking a hit this morning. >> and the feds' final 2012 meeting will be coming up next month. the beige book reporting that the economy is growing steadily. i asked paul volcker what he thought about it, if he thinks it's time to think about raising rates. >> it's kind of a silly argument. you're not going to conduct a monetary policy that you think is harmful to the economy and hoping it brings some pressure on somebody else. i mean i think that's -- that's
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underlisted. they can take it rightly or wrongly. they may think it ee appropriate for the circumstances as they see it and they're not going to something different because they thing that may somehow face a fiscal reform. >> do you think it's appropriate? i think it's appropriate. >> the current policy. >> well, that's a different question whether it's appropriate on its merits and don't like to comment on current policy. i only get a little nervous when they keep promising that they're going to maintain it forever. i think you have to be ready to make changes. the classic problem of the federal reserve is always do you tighten up soon enough when the process of inflation and a boom and a bubble are just beginning because that's when it's hardest to do it. anybody -- when the economy is already in excess and you tighten up, it's too late by definition. but it's very hard to
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anticipate. >> do you think they will? >> i hope so. they keep saying -- >> do you think you'll know when to go? do you think when you'd make the. >> i'll be dead by that time. no. it's a very hard judgment to make. sometimes you'll be wrong. but you've got to -- i think that is the chronic problem of any central bank because the implication is you have to begin tightening before the excess demand. before the bubbles. befor the inflationary process is under way before it's too difficult and too late. if you do it by definition, people don't complain. why are you removing the proverbial punch bowl before the party's really gotten drunken. that's what a responsible host does. he waters the punch bowl in time sniet sounds like you'd take the punch bowl right about now. >> about now? oh, no. >> not yet.
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>> not yet. >> okay. we're going to get his thoughts on the fiscal cliff and breaking up the banks a little later in the program. >> that's really interesting stuff, the idea that he worries about inflation too. he's a guy that had to handle it last time around and once the inflation gets out there, it's a little too late to shove the horse back in the barn. >> i think he's very worried as he said in the piece about how long this really gets extended. >> see, i think -- i asked you yesterday whether he would be in politic or not diplomatic, and i knew he wouldn't be. reading through the lines there when he says -- when you said so you'd stop it right now which is what he's implying. he immediately distanced himself. he can't say he'd stop it right now. >> think it's very difficult. >> so you need do like six or seven degrees of separation to figure out what he's really saying, think. when he said, oh, no, i wouldn't stop it right now. i mean there's guys sitting on the fed that wish they stopped it rue no. >> well, there's a nice little
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co code i think too. >> i do too. they're not elected. >> if you read between the lines and try to read his tea leaves. >> we can all understand where he's going with it. >> he also made the comment he's concerned about how he's promising to basically let this go on forever which is interesting too. >> let's talk about commodities now. mostly lower on wednesday with oil falling for a third straight day. stronger dlafrm gold steady now after seeing its biggest one-day drop in three weeks. is the wrangling over the fiscal cliff putting pressure on the trading block? joining us now, kevin kerr, president of kerr international and boris flossberg of kbs management. i've learned to go really slow with boris. to do the s right and to get to the sh, you know, boris. you've been doing it your whole life it's a new yorker thing. only new yorkers can pronounce it. >> i'm not a new yorker, god
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almighty. >> i'll make you an honorary one. >> no thanks. >> all right. >> what's happening with oil right now. >> well, joe, we're seeing a lot of it obvious. all this concern about wrangling, political wrangling, we'll probably get a last-minute deal. this makes them very nervous. i don't have a lot of tee panhandle right now. we have plenty of supply. i would be very cautious here with the report that came out yesterday. the base book showing we're seeing growth. and more numbers. we're going to have do it at these levels. probably some bargain buying and buying levels up to 90. >> it looks like they're going to get something going and we cut two points off and less demand for oil. but it would seem if we didn't get a deal, the dollar might strengthen so that oil -- and
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that would cause oil also to go down too. so i can see how both of those things would be negative. any deal that we get done probably involves kicking the can down the road, which is bad for the dollar, which is good for oil and the strong economy is good for oil. so oil might be the thing to watch for the up-to-the-minute sentiment on the deal. >> absolutely. i mean any breaking news could move this market either way because traders are real skittish right now. we've got all these problems in the middle east which aren't a direct impact right now but the fiscal cliff is what's on the table right at the moment. what happens next with that and if there is a last-minute decision. if there isn't, then, yes, the dollar could, you know, be the player here of what's going to make the difference. >> boris, your stuff is probably more important in terms of the -- the dollar is the currency of choice right now because we don't know what's going to happen in europe stiff. >> yeah. although it's actually kind of weakening right now on the idea that we are trying to resolve something on the fiscal cliff. but i actually think, you know,
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kicking the can down the road could be the best possible scenarios for near term merely because i'm afraid they could be repeating the same mistakes. we're in a type of recovery. if wi press too much on higher taxes and lower spending, it's going to be very detrimental to the economy. that's probably going to push everything lower. ironically enough, that's going to weaken the dollar lower. ite goes doing weaken it in order to offset any type of fiscal typing that we're talking about. >> so if we actually -- you'd rather kick the can. >> i would. i think we're not ready yet for any serious reform. the economy is way too -- is way too vulnerable right now. and, you know, steve liesman was on tv the other day. he was talking about the fact that consumers are not worried. they're only spending because
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they haven't understood that taxes are going to go up. we're at kind of a vulnerable state. >> the cut on the payroll taxes, that's going to go away. >> huge. >> the only stealth wage increase we've had has been a tax cut on the payroll increase, so it's very, very important. >> look at chris -- they're turning out good and your consumer confidence is up and housing is bouncing back. why are you still so scared? >> because i want it to continue, and i think that we're all making the mistake of 1938 when things started to look up a little bit. >> 1938? you weren't -- your parents weren't around. that were barely born then. what to you know about 1938? >> i read my books, my fdr. that's exactly what happened. they said, oh, things are better and let's tighten the budge and it brought the second wave of the great recession. i hope it doesn't go that way. >> we've got to end it there. there was a guest natasha at the same time.
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>> i remember. >> i wish we could do that every time. kevin can we call you natasha? >> you can. i'll put on a skirt and wig if i can have to. the punch bowl is like a swimming pool. >> hard to move a punch bowl like that. >> see you later. >> when we come back, we'll talk about a website that could save you an unnecessary trip to the doct doctor's office. they're helping patients get advice without the hassle of a waiting room. we'll speak to the company's founder ron gutman right after this. [ male announcer ] at scottrade, you won't just find us online, you'll also find us in person, with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person. [ rodger ] at scottrade,
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easy to use. it's the ultimate combination of speed, small size, and low-cost printing. welcome back, everybody. we're continuing with new ways to get your health questions answers. by the way, you get this for free. joining us right now is ron gutman, founder and ceo of health tab. this sounds a little bit too good to be true. i always thought about asking questions instead of going online and going on the internet you can actually ask a doctor those questions? >> yes, absolutely. it's a pleasure being here. it's actually 30,000 physicians.
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that will bring the network from 7,000 to good standing to more than 30,000 current physicians in good standing and you can ask any health question. >> it sounds great but why in the world would doctors agree do it? >> absolutely. they want to build a reputation to find more patients to get educated and to learn about how to work using mobile devices with patients online. >> why would they do this for free? it's like a free sample. they basically help people, how they provide their service when they come to see them in the real world. so when someone has a question, they can squ a question and get an answer that can see them in the real world. >> i have a couple of thoughts that jump up on this about potential problems. first would be trying to
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diagnose someone over a mobile device. it seems like they could get in big trouble if they improperly diagnose them and second, every time i go to a doctor's office, they seem more than busy. it's hard as a regular patient to get squeezed into the time. so who are these doctors who have excess time on their hands. >> it's about education. it's about replacing all the information sites or messageboards that don't have doctors in them. they connect with the right doctors. we have -- >> these are u.s. licensed physicians in good standing. we actually check that they don't have any disciplinary actions against them, no malpractice suits. these are some of the best doctors in this country. an average of almost 12 years in practice. >> here's my question. 12 years in practice. you say the best doctors in the
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country. the best doctors, i kent get an appointment with for like a month. >> what do you. even to. >>. >> if you have -- if you're sick they'll see you. >> i imagine the best doctors in the world frankly have no time. so is it -- i hate to be the skeptic. is there something to be said, though, about the quality of the doctors? 12 years also is different than, i think, the doctor that i have has probably been in the business for 20 years. i don't know. >> wait till next year. >> get an answer from one of his doctors is going to be thebest thing you get for an entire year after 2014. >> are you talking about obama care. >> >> you're going to be please, let me call one of your guys. >> what's the best incentive for
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doctors who don't have any time? >> my dad used to say if you want something done, give it to the busy people. you want to schedule an appointment with them, it will take you four months but they're every day answersing questions for hours. why do they do it? they do it because they want to build a reputation. we have what's called a doc score. it's like a fico score. it's being enhanced by the doctors answering questions. this is great place for them to. >> what's the model. >> we're building distry burks building the network. we have more than 30,000 filgss. >> you don't make money now. down the road you hope to? >> absolutely. we're talking about obama care. 30 million are going to go into the health care physicians and there aren't enough to take care of them.
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but what if we can create for the physician and patient a way to interact efficiently, cost e cost-effectively. >> we've got all these things. >> you say, i've got this, i've got that. >> i've got the same issue. >> they don't take insurance. >> we get additional colds. that's about it. >> he's asking for a friend of his. >> you have a friend who has a problem. ron, thank you very much for coming in today. we appreciate it. >> by the way, for more koj of our disrupter series you can turn to disrupters.cnbc.com. up next, our next stop is nevada, home of harry reid and home of the oldest profession.
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>> mustang ranch. >> why the folks at the mustang ranch are worry about the fiscal cliff. and later former federal reserve chairman paul volcker speaks exclusively with "squawk box" about solving the fiscal cliff. also at the top of the hour, former white house council economic provider greg mankiw. from currency trading for a few to a currency market for everyone. the potential of fxcm unlocked. nyse euronext. unlocking the world's potential. the potential of yelp unlocked. nyse euronext. unlocking the world's potential.
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welcome back, everybody.
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secretary treasurer time dpiet nev geithner is going to be speaking today. majority leader eric cantor, house bunt committee chairman paul ryan and the chairman of the house is tax's ways and mean committee, also lunch with republican senate minority leader mitch mcconnell and nancy pelosi. he has a pretty full schedule today. yesterday a number of high-profile corporate leaders met with president obama at the white house including goldman sachs' ceo lloyd blankfein. >> at this point both sides had acknowledged there was going to be revenue concessions and entitlement concessions. in fact, if you listen to it, again, i'm not a master of the political art here and i'm not no washington, but i would say if you had these point of views in a business context as close as they are, i would say a deal would be in reach. >> hard to say if the same rules
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of engage management apply when you're in washington, but we will have more on yesterday's meeting when we talk to senator orrin hatch when we talk to him. >> a trip to the wild west. a talk with some of harry reid's constituents. jane, we downloaded from andrew's iphone showing mustang ranch. how is business in nevada? >> don't tell me wife. >> you're going to nienld out. it's rough. as we approach the fiscal cliff and harry reid's state has been slow. it's hit every industry in nevada and i mean every industry. >> how's business? >> it's been better. >> susan austin run as small business outside reno, nevada, but her business is different. it's a brothel.
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the legendary mustang ranch. >> this is one of our suites, the asian suite. austin thought the world's oldest profession would be recessionproof. not true. >> then went my high rollers. they discovered they didn't have the discretionary income and they couldn't play as hard as they used to. well that definitely dug into their wallets which definitely affected us. >> will the fiscal cliff impact the mustang ranch? >> well, if folks rub out of money and jobs, i suppose it could. >> gillman is a republican who is looking to nevada's powerful democrat harry reid to keep that from happening. >> do you like harry read? >> harry reid and i have been friends if 30r years and harry and i both share a vision and a love for the state of nevada. >> susan austin says even here the cliff will hurt. >> anything that happens in washington affects everybody in the united states.
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it's going trickle down to me sooner or later, so it's definitely going to hurt me in the end. >> we're going to have her entire interview later. funnybusiness.cnbc.com. she didn't say what she wants harry reid to do over it. she says you don't talk politics or religion at a brothel. he wants to make sure it doesn't kill nevada's fledgling recovery. later gillman takes it to a 30,000-acre industrial park he's built for facilities for walmart and toys "r" us. he says when it comes to the fallout for fiscal cliffing he says, quote, this is where the buck stop zmienlts know of anyone who doesn't like harry reid. he must be a great senator for people in nevada. >> he takes care of the state. >> it's a small state and he's very powerful and he looks out for nevada and that's why you have republicans say they don't
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agree with him but they like what he does -- >> were you comfortable sashaying in there, jane? >> this isn't my first rodeo. you know, actually once in the '80s -- well, i'm dating myself. i posed as a prostitute for a story in miami and i was on the street of biscayne bay and nobody would stop. it was very embarrassing. >> you didn't touch anything while you were there, did you? i saw you sort of -- >> i was not like that. no, no. it was very pleasant. they were professional. >> all right. never mind. you were very comable. you were very comfort about in that brothel. >> i'm comfortable everywhere. i'm with the people. >> you are. >> sort of. >> that looks like an expensive room. and you played a prostitute. >> you upsell to that. it will cost you an extra $1,000. it's on the pleasure menu. >> have you got a complete menu
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you can send over? >> never mind. >> back to you. >> how much is business down? >> she would -- i have a wheel -- wait till you see it on the blog. she won't quantify it but she says, quote, significantly. and she said they have had to adjust their prices to the customers, though, quote, there is never a fire-sale here. >> wow. jane wells, thank you. that was fun. coming up next, a rare interview with former white house council of economic advisers chair greg man cue. we're going to talk about the economy, jobs, and more. so anyway, i've been to a lot of places. you know, i've helped alot of people save a lot of money. but today...( sfx: loud noise of metal object hitting the ground) things have been a little strange. (sfx: sound of piano smashing)
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today, the fiscal cliff looms. outrage in the country as the rise above road trip continues. reports throughout the day on cnbc. what will it take? we'll ask that and we'll ask republican senator orrin hatch why he thinks entitlement reform is the path that will lead to it. >> paul volcker, his take on the debt negotiations. >> we'll take care of it one way or the other. >> the third hour of "squawk
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box" starts right now. welcome back to the teacher -- no, to "squawk box." first in business worldwide. i'm joe kernen along with becky quick and andrew ross sorkin. we have a big, big hour to talk about both the impediments of getting a deal and get it done. greg mankiw will join us in just a minute. he's a former chairman of george w., 43's adviser and senator orrin hatch on a path to a debt agreement. plus, more of our exclusive interview with former fed chairman paul volcker, but, first, becky has your morning headlines. among our top stories today, stocks gaining some ground yesterday on optimism about a deal to avotert the fiscal clif.
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the dow closing by up more than 100 points. that's the finlt time a swing like that has happened in over a year. we do have a busy day ahead for treasury secretary tim geithner as we've been talking about repeatedly this morning. he's going to be talking with senator harry reid at 10ks eastern time following by a meeting with house republican leaders including john boehner, eric cantor and paul ryan. secreta secretary geithner will have lunch. yesterday there were a number of high-profile leaders who met with president obama at the white house including goldman sachs' ceo lloyd blankfein. >> at this time there's going to be revenue concessions and entitlement concessions. in fact, if you listen to it, again, i'm not a master of the political earth here. i'm in washington, but i would say if you had these point of views in a business context as
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close as they are, i would say a deal would be in reach. >> blankfein said that the president's plan is very detailed and seemed credible as you just heard there. let's get a check on the markets. the u.s. markets are indicating higher once again even after those gains yesterday. the dow up by 65 points. overseas in asia we saw some green arrows there as well everywhere except in shanghai. in europe this morning it's more of the same. a lot of what's been happening here influencing what's happening there as well. the footsie is up about 9, 10%. in germany the dax is up by 6/10 of a percent. take a look at tiffany's. this is an outstanding loser. coming in at 49 cent as share. revenue also missing the mark and the luxury retailer is cutting its full-year forecast. tiffany is talking about continuing global economic weakness. by the way, it also has
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difficult comparisons to last year and saw weak comparisons as well. >> like today's disaster du jour th . the single woft. >> exact same thing. >> and they're playing a high-stakes game of chicken when it comes to the fiscal cliff. our next guest things so. joining us with the a slulgs of the crisis is greg mankiw. harvard economics professor and former chairman of president george w. bush's council of economic advisers. becky and i just distilled this argument down off camera when i was reciting what someone just wrote in. there are more republicans in washington than democrats if you just add up the house, the senate, a tnld president. becky says, yes, but more powerful ones are democrats. >> yes. >> meaning you've got some
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cincinnati -- >> my point is it's like monopoly. do you buy baltic or park place. >> my point is if you're passing a bill -- >> you can't do it without all three. >> it doesn't matter who's more powerful, greg. and there are guys in the house that cohold some pretty powerful cards. >> absolutely. i think what we see now is these two cards hurtling toward each other and the question is who's going to swerve. i think there's a lot at stake right now for both political parties and think if we go off the fiscal cliff for very long the economy will almost certainly go into a recession. if it didn't, the economists are going to have to revise all our models. so i think it could occur if we go very long. and if we do that, the question is who's going do that. i think the republicans get a lot to alabama. on the other hand it would also derail his second term. he wouldn't have get anything done. they both have a lot to lose. and the question is who's going
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to compromise and who's going to swerve first in this high stakes game of chicken. >> greg, one thing that i hear all the time from democrats is that the clinton years were really good because of the clinton tax rates. one of the things in the fiscal cliff is going back to the clinton era tax rates for everybody. now, i know there's sequestration and payroll tax. there's a lot of other things in there, but we did okay with those tax rates. why did we just assume there'd be a recession. >> let me mention a couple of things from the 1990s that are very different from today. first, there was a lot. there was an implicit deal that when clinton raised tax rates, the federal reserve would accommodate that with lower interest rates. you're not going to get that today. we're already basically at zero. there's very little for the feds to do. secondly if you go back to the 1990s, you may recall we had this thing called the internet bubble. that's a big driver.
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>> no, no. that's a republican's favorite answer. it wasn't clinton. it with us the bubble. >> we -- well, we did have a bubble. i mean that was a big thing. it drove in a lot of revenue. and if you recall clinton's last year in office, the bubble was starting to collapse. >> we had a pretty good housing market, too, i think. >> absolutely. >> and you had newt gingrich in the house and president clinton try angulated also and attacked to is the center. >> in '96, absolutely. the welfare reform. go back to the 90s and aeverything that happens in the '90s is because the tax rate went from 35 to 39.6%. a lot of other things happened. >> what's the implication if we do? >> what? >> what is the implication if we go up to that era of tax rates now? >> i think it gends on how quickly we do it. it was a tough year even if they get past the fiscal cliff. we're going to get higher payroll taxes. it's a fiscal drag in a situation where the federal
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reserve has very little room to maneuver. so it's going to be a very slow growth year, i think, anyway, in the best of times. and the more taxes we see next year, the slower the growth will be. we need some long-term fiscal austerity for sure, but we need short-term fiscal atheirty. it's a glide path toward fiscal sustainability but nothing too abrupt. >> well, let's say that we get -- now we're seeing some indications that maybe we go up and we don't do 250. maybe the president agrees to 500. maybe we go to 38% or something like that. what do you think he's willing to do on the entitlement side of things for starters and then does this -- does this set up a path to simpson bowls or a bigger deal down the road? >> the big deal to me is why the administration has been so lukewarm about the recommendations of their own panel. simpson-bowles was terrific.
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i think it wasn't perfect from my perspective. >> you can't figure out why they haven't been? there's entitlement cut and lowering marginal rates to 20%. that's a nonstarter, both of those. >> if you look at the distributional effect of simpson-bowles it's much more favorable because simpson-bowles also raised the capital gaines. if you look back to 86, what we did was we lowered rates by raising the capital gains rate. that's something that would -- republicans aren't going to like but it's a way to tax the rich. >> i agree. i think i could sell it to the left if they would just listen. i could sell higher capital gains. some of it is much better than this. it's like 2% or 3% rise on the upper marginal rates. you know, they've got a much better deal if we do no deductions and we do a rise in
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capital gains rate. you get a lot more money from rich people. i don't think they understand that. >> absolutely. the certain peculiarities like people have been talking about for years where it's automatically solved. i love that idea. it's a lot better than things people are talking about now. >> andrew, do you consider that? if it's over, i can't think, it anymore. >> i'm excited about that. >> but if you really want to soak the rich, which you do, why not do it with deductions and capital gains going to ordinary income? >> i would argue that you should, wu i've always been told and i think i've done some of the math and maybe we can talk to greg after the break about this but there's still not enough money simply in raising the -- >> there's certainly not enough. >> if you want after capital gains? >> i don't know about that. there's certainly not enough in going up four points of 250 and above.
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that's $75 million a year. >> i agree with you there. >> greg, will you hang out for a second? where are you? where's the studio? is it in cambridge? >> it's in newton. >> newton. i know exactly where you are. thank you. stick with us. we'll be back with more from harvard's greg mankiw in just a second. target now reporting same-store sales drops of 1%. adverse to 2 ppt 1% increases. target says the month got off to a slow start and strengthened toward the same and macy's seeing same-store sales drop 7/10 of a per senn. thanksgiving was not enough to make up for your the impact of hurricane sandy. >> that's not necessarily a commentary on the holiday season so much as -- >> hurricane sandy and the weather and everything else. coming up, we're rising up
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above partisan politics to get a deal on the debt. we're going to get paul volcker's comments and later senator orrin hatch will be joining us to talk about what it will take to reach a compromise in washington to avoid the fiscal cliff, ring the bell. plus, we've got breaking economic data due out at 8:30 eastern. economists looking for 395,000 jobless and expects q3 gd to rise by 2.8%. start taking notes. we'll see you very shortly. to help those affected and to cover cleanup costs. today, the beaches and gulf are open, and many areas are reporting their best tourism seasons in years. and bp's also committed to america. we support nearly 250,000 jobs and invest more here than anywhere else. we're working to fuel america for generations to come. our commitment has never been stronger.
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welcome back to "squawk box" this morning. ceos from all around the country traveled to washington to meet with the president. we asked former federal chairman paul volcker about his expectations for a deal. it's hard to thing they won't take care of it one way or the other. i think they're kind of unrealistic expectations. you've got to have a fix for that. the problem is making it credible. particularly on the expenditure side. part of the deal has to be
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realistic restraint on the expenditures. they're going to take place way off in the future. how can you be sufficient realistic about that. i think we need a big reform in the tax system. we're going to need some changes in medicare. we're going need restraint in other spending. you can't do that in three weeks. >> so do you think we go off the fiscal cliff? >> no. all you've got to do -- you know what you've got to do on the tax side. that's simple. you have to palass a law that ss the law has to be overwritten. >> and what would be your position on that? >> i think it's the simple thing to do. obviously do what the president is saying, you know. he ran a campaign on it. the legitimacy of that. if you've got to act in three weeks, you're not going to
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revise the income tax code in three weeks. it may be perfectly legitimate. i think that both. personal and corporate need a lot of thought and a lot of revision. they're both broken. but you're not going to do that in three weeks. the challenge i see is in three weeks you've got to have some convincing balance of the tax side, the revenue side, with the expenditure side. it's inherent. you can't change the expenditures in three weeks. you can indicate intentions, but you can't -- >> what do you think happens then? >> i think you get some understanding about the kind of framework for dealing with the expenditure side. >> but you do think we come up with the frachlwork. >> you lived in washington. are there people who are saying we should go into january and create that --
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>> some kind of a credible framework. 000 make that credible is a big problem. >> okay. let's continue our conversation with greg mankiw. he's the former chairman of the white house council of advisers. i don't know if you had a chance to hear what paul voerk had a chance to say, but is your sense that -- is your sense if we go over, meaning -- if we go over, let's say, to the middle of january, what do you think happens to the markets? >> well, i think markets might take a hit because they don't know how long it's going to go on. i think what's more important is the economy broadly. and i think if we go over for a couple of weeks and they change some things retroactively, it could be minor in the sense they don't have a chance of holding if they're really expecting some revision. i think the question is whether they'd go over substantially. i think that would be potentially catastrophic for the unemployment swamt, which is already still weak.
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so i don't think january 1 is the hard deadline but i think the events coming up are quite serious. >> we were talking about what happens if you were to tax capital gains at ordinary income. i looked some of this up. if you were to raise capital gains to 20% and dividends to 39.6%, apparently you'd raise $242 billion over ten years. does that make sense to you, and is that enough? >> no, it's not enough. i think that could be part of the deal. i feel like what bowles-simpson did, that's part of it. that was one of the ways they could get revenue from the rich. but they also scaled back a lot of the deductions as well. i think if you look at a lot of the tax expenditures we had and exclusions, there are not a lot of good polici policies. it goes to 28. >> if you want to raise 242 -- >> you said 20% on capital gains. >> that is 20%. >> simpson-bowles is higher.
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>> if you go to simpson-bowles -- >> they do it at ordinary income. >> yeah. simpson-bowles, the same thing reagan did in '86. >> that doesn't -- do we really think that's on the table? >> no, no. that -- it doesn't seem to be. oddly, simpson bowls does not seem to be on the table even though the president's the one who put i there and got a lot of support on policy ones and then it doesn't get much traction in washington. so this puzzles me a little bit but that certainly should be on the tachblt simpson bowls put on the table the tax expenditures which are still being discussed and i tlink's good respective to scale them back. let me give you one example. it's really not good policy. mine what it does is encourages too much of the nation's capital stock to be allocated to residential rather than business capital and it's not particularly fair because it goes to high income people like me. more people tend to be renters. >> so what happens to the real estate market if you do that? >> well, interest rates are so
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low right now i don't think it would take a huge hit, but think it's -- you're talking about a long-term policy. >> grandfathered in over a decade ago. >> sure. >> how much would health care not being deductible drks how much -- that would raise so much money, wouldn't it, greg? >> absolutely. i mean there's no reason why it should be tax excluded. if your employer provided you with car insurance, that would be taxable compensation and if it were tax-free, what would do you? you eat get a car that covered every oil change and gas. >> that would raise a lot of money. >> you would also have a very difficult time doing that politically because that was one of the biggest problems with the president's headlight care plan when they were putting it through. they were talk about taxing the cadillac plans and the unions rose up and said they're going put in large part from that too. >> the truth is everything that's aricht matticly
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reasonab reasonable. the reason we haven't come up with a plob is the middle class expect as certain level of entitlement, they expect a certain level of taxes and they don't add up. either we're going to have to significantly scale back over a period of many years or significantly increase taxes not just on the rich but everybody. >> why not meet in the middle and do a little be it of both? >> that probably will be the compromise in the end. ultimately -- >> but if you're not going raise on the middle class, you can't do it. there's not enough money. >> you can't get it all from the rich. even if obama got what he wanted from the rich, even 75% wouldn't do it. >> nor 100%. nobody tells us the truth though. >> nobody wants to say that's the fundamental choice. >> greg, thank you for telling us the truth this morning. >> my pleasure. >> as sad as that truth may be for many people to hear. >> thank you. coming up, we have a breaking -- there was a radio
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guy mankiw, wasn't there? >> mankiw -- did i say mancow? >> we're going to -- >> kind of a raunchy radio guy, too, i think. >> yeah. that wasn't him. who lives in the white house, it's about who lives in the yellow house, the green, and the apartment house, too. today we not only honor the oval office, but we honor the cubicle, and the home office as well. because today it's about all of us. and no matter who you are, you're the commander-in-chief of your own life. ♪ can i still ship a gift in time for christmas? yeah, sure you can. great. where's your gift? uh... whew. [ male announcer ] break from the holiday stress. ship fedex express by december 22nd for christmas delivery.
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returning toe the bargaining table for the first time in a week, and for the finlt time outside media voices always contributing to the talks. the talks went well enough that the two sides will be back at the negotiating table. it takes us to piece cat a way, new jersey. the sports story of the day -- >> wait, wait, sports story of the day, who wrote that? >> from my perspective. they'll look to take the bowl berth against the 9-2 cardinals team. joe, he's wondering why you wimped out. >> i'm not going go to a division i football -- >> you're afraid a fra anity. >> i am. >> you are. >> he told me i'd have to wear
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the jersey. >> i don't know if i can. >> it's small and he put a 3 on mine. >> they're all small. >> you are number 3. >> if the shirt fits. when we come back, breaking economic numbers. the second estimate of third quarter gdp. right now as we head to a break, take a look at the futures. s&p futures up by more than 7. [ male announcer ] this is steve. he loves risk. but whether he's climbing everest, scuba diving the great barrier reef with sharks,
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breaking dawn. jobless claims hitting right now. rick santelli. >> well, here we go. jobless claims dropped from 416, which is 6,000 higher than originally released down to 393. you know, we have to talk about sandy with these numbers. lost it my gps. but gdp, second look. third quarter. 2.7. so it did indeed get upgraded from its original dismal 2.0 to 2.7. 2 president 2.7 is better than 2.0. many numbers go there. whether it's durables,
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inventories, this one was a pretty easy read to see it was going to be better was just a question of how much. let's look at the internals. the consumption took a big hit. recently released to 2.0. now 1.4. if we look at the price index, steady, maybe a point lower. if you look at personal consumption expenditures on a kwrter basis, it was 1.1. that's a couple of tenth light. so i guess to summarize, gdp had an upgrade and in the new world we live in where everything is looked at through a prism of smaller is a lot better than it used to be, 2.7 is going to satisfy many. jobless claims, as i said, diejts know if steve or other analysts or economists can give us a color on how super rotten storm sandy affected these numbers, but it seems that they appear to be working a bit lower, at least under $400,000. the response to the market is kind of fascinating.
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we're up 65 in dow futures, up 60. not a huge difference. down to a quarter of a cent. the euro's over 130. they're sprinkling around the money. spanish banks, maybe a spanish bailout. it's not at whether things are getting better. it's the perception that ate least for today we've gotten by and maybe things will work their way out over time. back to you. >> i think a couple of things come to mind, rick. we've got steve liesman here with more of the data. number one i think, wow, if we really do rise above and get this solved, we're set up to do pretty well, i think, if that's the starting point. the other thing is i read what the fed is saying and i see a disconnect how down they seem to be and the reality. i mean do we really got to go all the way to 2017 or whatever it is, rick, if we're at 2.-- don't we re-evaluate?
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>> they don't. >> it's not a real 2.7. >> this is malice in wonderland. once the fed moved into crisis mode, once any part of the government moves into crisis mode, once they're in the new space, they start to feel a bit comfortable and they don't vacate it. and this is something that's difficult to reverse. >> so what are you saying? >> you know -- >> you said the 2.7 is not real. >> it's very funny. you missed conspiracy. >> it didn't matter? >> i gave it to you when it first came out and you missed it. i understand, i talk a little wonky and you don't listen all the time. the numbers are juiced by government spending, up by federal spends. up on a real basis. four straight quarters. it was up 9.5%. i think a chunk of that was going to be defense. a big chunk is not a defense. the 2.7 i don't think is sustainable in and of itself.
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before this number came out, the government had added 0.7 to the total 2% that was out there. so this 9.5%. it could be something of a rebound. it's not a sustainable way to do it. you have slight skpoerts. inventis added something compared to last time. but look at the internals. i think rick gave us 2% down to 1.4 was the revision in consumer spending. something to watch. now, i'm not sure that that number -- the real number, the underlying trend is quite as weak as that but it's not going to be a whole long stronger than the original print. then you look at the numbers. what really should trouble you is the business investment numbers which are down 2.2%. if you could see a rebound in that, now maybe, joe, this is what you're talking about. you get a situation where businesses start to spend and
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then you can start to sense it. >> steve, we had volcker -- we did this interview with volcker and the thing that they always do wrong is they don't take the punch bowl away when it becomes clear -- >> i saw that, i saw that. i thought that was man living in another time. i thought that was a man -- >> it's a time i wish we could get back to and i wish we had somebody like a young version of paul volcker in there now. tough luf. when i think of tough love, think of the wonderful paul volcker. was in the pits when he was fed clairman. >> he wishes it was a different time. i think he's still thinking about fighting the old battle. back in 2012. >> ben bernanke is fating the old battle thinking liquidity was the wish this crisis which is wrong, wrong, wrong.
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volcker, volcker really has it right. >> go ahead. volcker's point that kind of caught me is he thinks this is the chronic problem, i think were his words with all central bangs. you have to move before you actually see it show up. >> you do. but in the new world, which it is a new world, the bigger problem is -- >> never is a new world. >> he gave the stamp of approval to bernanke. i think of him differently. >> i thought he would be rolling over. >> reading between the lines. >> rolling over in his grave. >> no. look, look. >> compared to what he did. >> the thing that the fed wrestles with is this idea of symmetry on the upside and down side, okay? so the think they're fwiegt is they know how to fight inflation by taking away the punch bowl. what do do you with the economy when you put all the punch out and it's still not going. >> and you're not drunk. >> and it's at the zero-bound. this is what they're wrestling
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with. bernanke feels like he was fighting inflation. he probably thought they solved that. michael from columbia wrote a piece. the problem is the fed has to cause inflation. that's one side. then there's people like rick who have a valid point of view. then the problem is, you know what? the fed is really causing inflation. it needs to take it. the fed feels like it's having an effect right now on the economy and it's lowering interest rates. we've got this rebound in housing which let me take a look at the housing numbers, housing investment was up 14.2% so weer are getting something of a response there. i think that paul volcker is fighting the old battle. the old battle was the one fought for many years. at the zerobound the game does change. what the right policy is indeed a matter of debate.
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>> you would watch lending. i come every corner and say it's bag deal. it's not a big deal because it hasn't moved a whole lot. what you want to see is those excess receives become required reserve. >> all the money that they're keeping at the fed. they start loaning that out to other people? >>. >> right. >> then base money becoming hot money. fraskly the world has changed since volcker and we're now in a regime where we follow inflation expectations much more closely than we do actually inflation. >> rick, what? >> what? >> joe, i want to ask you something. it's where we, you and i and many conservatives argue. not only are they being moved. they're on roller and they have anymore on remote control right
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now. steve when he tries to defend the fed, he says the old days don't count. when we want tax policy it becomes the benchmark. you can't win with these arguments. >> >> were you not paying attention? volcker, those are the old days. that different time is appropriate. that's appropriate to go back to. >> they're the same people saying the same things. >> you've eaten this food before. >> rick, it sounds like a nice thing that can conflate those two but they're two different concepts. >> of course they are. >> monetary policy.
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>> guys, i know we're not going to solve this discussion or this disagreement this time around. rick, i do want to say one thing. i heard you on "closing bell" yesterday and i want to say thank you. you offered clarity with what was happening with gold. you were talking about that $30 drop in gold. you were just saying people may look at the big winner os of the 2012 and start using that as there piggy bank, something like a gold or around anal. thank you. that was the clearest explanation i heard on it. >> pammy dom mass a great article on the other side of that same book and that is of course what's going on with these differ accidents that are getting paid before the deadline. >> rick. >> same story. >> every time we talk about the clinton ra clinton-era tax rates, everybody talks about going down. it was basically a trillion dollars less, wasn't it? it was a full trillion dollar less. >> and once again, the moving goalposts, joe. we're going to get to the 39%
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with obama care no matter what happens. >> that's for everybody, right? how much does it go up? i mean we're already there, right? >> yeah. we're already there. you know whatsome. >> with obama care. >> i think -- you know, i listened to warren buffett yesterday and i look at what's going on with these dividend deals. even at these wide stages of previous times don't see to acknowledge the realities of how tax policy alters our behavior. >> right. all right. rick santelli, thanks. steve, thanks. >> when we come back, rising above partisan politics to avoid the fiscal cliff. we will ask senator orrin hatch what each side should give up to try to avoid a debt disaster. "squawk" will be right back. n ts from independent experts and see what criteria they use. such as a 5% yield on dividend-paying stocks. then you can customize the strategies and narrow down to exactly those stocks you want to follow. i'm mark allen of fidelity investments.
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can entitlement reform be the answer to avoid going over the fiscal clfr? senator orrin hatch things so. senator hatch, thank you very much for joining us this morning. >> happy to do so. >> you know, it does sound like there is some thawing and maybe there's some movement between the two sides. the front page of "the wall street journal" lays out how president obama may not be wedded to making sure that marginal tax increases are raised. is that the key to finding some sort of a solution between the two sides? >> well, there are two things. one is to not raise marginal tax rates, find the savings elsewhere, but also that we won't raise tax rates at all.
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certainly because we just think you've about got to have structural entitlement reform. we know they're in trouble. we also know we're spending more money today than we've ever spent in history except during world war ii. and frankly we know that our revenue base will come back to where it usually is at 18, 18.5% and probably a little bit more. so republicans just don't want to raise tax rates. we want to find the monies the president would like to have elsewhere in the code and i think we can. but we sure as heck need structural entitlement reform to get there. you can't just rely on congress to do it. you've got to have prison at leadership and so i'm hoping my friend, barack obama, the president of the united states, will get off his duff and start leading.
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because the democrats will follow if he leads and the republicans will be put in a position to say, yes, we'll cooperate and help save the country from the mess it's headed toward. >> senator, i know you're wearing a rise above pin. >> right here. >> we see that and appreciate your wearing that. one thing that that suggests is that you are willing to go ahead and raise revenue if you find ways to spending cuts too. because if you go back to something like a simpson bowles, that talks how you have to have compromise by agreeing to do both things. >> well, almost everybody. if we don't -- if we don't really do something about structural entitlement reform, we're not going to be successful even if we do raise rates. i can tell you this. the democrats -- i don't know that any democrats ran on raising rates in the last election. they all know that's not what they should do. >> we heard -- now we're hearing that, senator, that that was the entire thing. he ran on higher taxes.
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that's the latest narrative, which i love. >> that was the came pain. the fact of the matter is i don't know anybody in the senate or house who ran on the basis of raising tax rates. now, look. let's face it. we're spending much more money than we have and it's just that simple. >> senator, we had paul volcker on. e be some of the tape during the program and he just said he thought it was impossible in the next three weeks to actually get a real grand bargain plan passed. is that your assessment as well? i mean do you think we're going to have to do a little deal to get a big deal? >> well, i'm talking to the democratic party on the other side of the senate and i found that there's a lit billion it of the attitude that they think the president and others might be willing to just, you know, put this over until next year, which would be a tremendous mistake. the irs could not get things in
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order in time if we do that. we need to face this music right now. to get a grand bargain, it's possible under the circumstances. but one thing we do not need to do is raise tax rates so that democrats can just spend more and not really pay down this horrendous nagtsal debt and do that. look, i can show you how putting this over for a year and dedicating that year to strulkt real tax reform will be will really work pretty doggone well and that the cost of that. you can run the country for more than four to seven days on that $23 million so we're doing things that really we ought to resolve now. and stop from spending, you know, well over the usual 19 or 20% of gdp. we're up around 23 to 25%. we've been as high as 25.3% under this administration. that's way too high.
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it's eating us alive. and part of the biggest problem of all is the inability and the lack of inability or desire to do what really has to be done structurally. we've got to change medicare. it goes broke in ten years. >> let's say you get -- let's say the republicans have said we're open to raising revenue, however you do. it. maybe you go over 500 or 37 or do it with closing the loophole. how do you build into that short term agreement to guarantee you to do something with spending and entitlement? >> well, you're talking about raising tax rates. i don't know of in republicans who want to do that, but we think we can find revenues that. >> that's going to be in the final deal, like 500,000 and above. 37, 38%. that's what we're hearing now. >> chuck schumer believes it ought to be a million dollars or above, and warren buffett, you know, has indicated that it should be higher himself. one thing they're not doing it
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is working obstructial tax entitlement reforms. >> senator hatch you have signed grover norquist's pledge not to raise taxes but what i'm maring you say is you would find ways to raise revenue if you can get your -- a solution on the other side that would other side that would also cut spending and lower -- or deal with the entitlements as well. >> i believe that pledge will be very important. we're going to have to find ways within the code and within our budget to be able to raise the money, the revenue that may be needed to pay down some of these debts. >> the president doesn't want to just raise revenue, he wants to raise marginal rates. you say no way raising rates? >> no. >> i want to find where people stand. >> i understand if everyone makes a pledge saying one thing, at least now people are willing to change. >> i have only been here 36
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years, but every time we have bitten that apple and raise tax rates, they stay in effect and the spending rates never go down. that's really what's involved here. >> senator hatch, want to thank you very much for joining us and we hope you will come back again soon. >> coming up, the mad dash to the opening bell. up next, jim cramer in stocks to watch ahead of the open. folks who save hundreds of dollars switching to geico sure are happy. how happy, ronny? happier than gallagher at a farmers' market. get happy. get geico. chances are, you're not made of money, so don't overpay for motorcycle insurance.
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welcome to the world leader in derivatives. welcome to superderivatives. jim cramer with us now. >> i kneel like the markets are saying things are better, the president's saying there's some give. we're beginning to get a number which shows you the disparity between what some are saying needs to be done and others is not that big. i think the market today is saying, listen, do it before the end of the year. it's been right to fade the
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optimism. especially due to the fact that retail sales are down. >> anything you're looking at in particular this morning? >> i'm kind of blown away by the tiffanys and the kohl's. sandy is making it so it's impossible to figure out what really happened and sandy is such a big factor, i know 30% to 40% -- >> jim majors came out and said they did okay for the holiday shopping weekend that was in there, but it couldn't make up for the weakness of sandy. you got another month before you're going to see anything. >> this is make or break, if we get more fiscal cliff bad news, we miss one window to sell a lot of product. i'm nervous about retail.
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it seems like the wrong sector. >> mr. cramer, we're going to see you in just a few seconds. senator rand paul on the past to fiscal compromise, keep your eyes on that, that's coming up at 11:10 a.m. this morning. the clock is ticking for lawmakers to come up with a compromise deal to keep us from going over the fiscal cliff. ♪
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go national. go like a pro. stock of the day. research in motion. get your blackberry out. >> yeah, i do. >> shares were risinging inon upgrade from goldman-sachs, and more optimism about the blackber blackberry. gold man now expects we're going to get what to profitability in the coming fiscal year. consensus is for a loss. do you want